Brazil audit: 'corrupt World Cup costs'

Government audit and electoral data shows huge rise in both construction costs and campaign funding by firms involved.

Outrage at the cost of the World Cup drove about a million Brazilians to the streets in protest last year [EPA]

The cost of building Brasilia's World Cup stadium has nearly tripled to $900m in public funds, largely due to allegedly fraudulent billing, government auditors have said.

After the dramatic increase in costs, it is now the world's second-most expensive football arena, even though the city has no major professional team.

Analysis of data from Brazil's top electoral court by the AP news agency shows skyrocketing campaign contributions by companies that have won the most World Cup projects.

The lead builder of Brasilia's stadium increased its political donations 500-fold in the most recent election.

The links between construction firms and politicians add to suspicions that preparations for football's premier event are marred by corruption.

They also raise questions about how politicians who benefit from construction firms' largesse can be effective watchdogs over billion-dollar World Cup contracts.

"These donations are making corruption in this country even worse and making it increasingly difficult to fight," said Renato Rainha, an arbiter at Brasilia's Audit Court, which is investigating the Brasilia stadium spending.

"These politicians are working for those who financed campaigns."

With only three-fourths of the $900m stadium project examined by auditors, $275m hve already been found in alleged price-gouging.

Federal prosecutors say as yet no individuals or companies face corruption charges related to World Cup works. There are at least a dozen separate federal investigations into World Cup spending.

Claudio Monteiro, the head of the government's World Cup committee in Brasilia responsible for oversight, said the audit court's allegations were simply wrong and that all the spending would be justified.

"This report comes out just 100 days before the Cup? That's why I say they're trying to spoil the party," Monteiro said from his office outside the stadium. "We're going to show how this report is off base."

Political contributions

Funding for Brasilia's stadium relies solely on financing from the federal district's coffers, meaning every cent comes from taxpayers.

The auditors' report found instances of what appears to be flagrant overpricing.

For instance, it says the transportation of pre-fabricated grandstands was supposed to cost just $4,700, but the construction consortium billed the government $1.5m.

The consortium is made up of Andrade Gutierrez, a construction conglomerate, and Via Engenharia, an engineering firm.

The steel to build the arena represented one-fifth of total expenses, and auditors say wasteful cutting practices or poor planning added $28m in costs, the single biggest overrun.

The audit questions why the consortium had to discard 12 percent of its steel in Brasilia when Andrade Gutierrez, using the same cutting methods, lost just five percent of steel at another stadium in Manaus, and virtually none at a Cup arena in the city of Cuiaba.

Andrade Gutierrez did not respond to an AP request for comment on the accusations of cost overruns. It noted its political donations were legal.

Andrade Gutierrez, which was awarded stakes in contracts totaling nearly one-fourth of the World Cup's total price tag, contributed $73,180 in 2008 municipal elections.

Four years later, after it was known which cities were hosting tournament matches, and thus which political parties controlled the local governments that awarded and are overseeing cup projects, the company's political contributions totaled $37.1m.

Widespread protests

While those campaign contributions were legal, they are likely to soon be banned by Brazil's Supreme Court.

A majority of justices voted last month to end corporate donations, citing corruption concerns. A single justice demanded to delay a final vote, meaning the reform will not take effect for months, after the World Cup is over.

Suspicions abound in Brazil, where in a poll last year three-fourths of respondents said the World Cup construction has been infused with corruption.

That helped fuel widespread, often violent, anti-government protests last June that sent more than a million Brazilians onto the streets. Many protesters railed against the billions spent to host the tournament.

The overall price of the 12 stadiums, four of which critics say will become white elephants after the tournament because they are in cities that cannot support them, has jumped to $4.2bn in nominal terms, nearly four times the estimate in a 2007 FIFA document published just days before Brazil was awarded the tournament.

At the time, leaders also promised the stadiums would be privately funded.

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